Marijuana Industry In the United States is Officially Big Business, But Federal Law Makes it Difficult For the Market To Run Efficiently

byAlex Averin

Marijuana Business in the United States:

Marijuana is officially big business in the United States and it is expected to get even bigger over the next five years as more states pass laws which make it legal for Americans over the age of 21 to use marijuana for medical and recreational reasons. As of this year, 23 states and the District of Columbia have passed laws that legalize marijuana in some form. Four states at this time permit the recreational use of marijuana for state residents 21 years of age or older. These new laws are helping to build a foundation for the business of marijuana distribution. Marijuana sale in the U.S. has made the marijuana sector a billion dollar industry. This has been accomplished with less than half of the states on board with some form of legalization. Big things are expected in the industry as more states pass pro-marijuana legislation over the next five years, but the state versus federal law conflicts make for inconsistent business.

Big Business in the World of Marijuana can be Difficult:

The marijuana industry pulled in approximately 2.7 billion dollars last year and can now be considered one of the top growing business sectors in the U.S. The top earning state last year regarding marijuana sales was Colorado. The marijuana market however is not running as efficiently as it could be due, in part, to the fractured law and rule system that has sporadically developed across the nation. The uneven system of law and regulation makes it difficult for the market to run effectively. Many banks are unwilling to do business with entities that make money from marijuana sales. The hold up is federal law. Marijuana is still illegal on the federal level and many banks fear being shut for doing business in the marijuana market.

Bank Access one Big Factor Holding the Marijuana Sector Back:

The lack of bank access means that the marijuana sector has to work largely in the realm of cash only. Since getting a loan is quite difficult, all profit must be rolled back into the business and this can be a troublesome reality. The fact that many banks are unwilling to do business also makes it more difficult to track the money earned. This could lead to the potential that a marijuana business might directly, or indirectly, under-report earnings. Until the federal government officially changes the law regarding marijuana, savings and loans institutions will be fearful. The federal government could potentially, at any time, decide that the institution doing business with the marijuana industry is an accessory or laundering money. It is a risky slope that many banks are not willing to traverse at this time and therefore, the marijuana market will run much less efficiently than it otherwise could in the United States.